PLAN DOCUMENT VP Worldwide Sales - FY10 Sales Incentive Plan

1.0

PURPOSE

1.1

Exar Corporation (the “Company”) maintains the VP Worldwide Sales - FY10 Sales Incentive Plan (the “Plan”) to provide a framework by which the sales achievement of Plan participants can be measured and rewarded, and to provide clearly defined rewards for sales achievement against measurable and predefined objectives.

2.0

ADMINISTRATION; ELIGIBILITY; TERMINATION OF EMPLOYMENT

2.1

The Compensation Committee of the Company’s Board of Directors shall administer the Plan, shall select the participants eligible to participate in the Plan and shall determine the terms of awards granted under the Plan and any amounts payable with respect to such awards. The Company’s Vice President of Worldwide Sales shall be the sole participant in the Plan for the Company’s 2010 fiscal year.

2.2

A participant who terminates employment voluntarily from the Company will be paid an incentive award through the last day of the last full fiscal quarter of employment. A participant whose employment with the Company is involuntarily terminated, excluding termination for cause, will be paid an incentive award for the fiscal quarter in which the termination occurs on a prorated basis through the last day worked. A participant on an approved leave of absence will receive an incentive award on a prorated basis for the time actually worked (and not on leave) during the quarter.

2.3

Participants in the Plan are not eligible to participate in any other annual incentive compensation program of the Company that may be established from time to time (other than any Company equity-based awards that may be specifically granted to the participant by the Compensation Committee), such as the Executive Incentive Compensation Program, Key Employee Incentive Compensation Program, Quarterly Cash Profit Sharing Program, or any plan including a sales-based or Design Win metric.

3.0

OPERATING PROCEDURES AND RESPONSIBILITIES

3.1

The Compensation Committee will establish a target incentive (“Target Incentive”) for the participant expressed as a percentage of the participant’s annual rate of base salary in effect at the end of the applicable fiscal quarter.

3.2

The Target Incentive represents the payout that the participant would be entitled to receive at 100% target performance for each of the components of the Plan, subject to the terms and conditions of the Plan.

3.3

The Plan is a cumulative plan for each fiscal quarter. However, the payment made for any fiscal quarter prior to final fiscal quarter of the fiscal year cannot exceed 25% of the Target Incentive amount for the fiscal year.

3.4

Payout is based on individual attainment against target. If attainment exceeds 100% of the target, then the payout is accelerated at a rate of 110% of the actual percentage of the target attained. If attainment is less than 90% of the target, then the payout is decelerated at a rate of 90% of the actual percentage of the target attained.

3.4.1

No acceleration factor will be applied unless actual performance for all components of the Plan exceeds 100%